Shortly after Epic Games, creator of Fortnite, sued Apple for unfair and anti-competitive actions, major news organisations including The New York Times, The Washington Post, The Guardian, BBC News, Bloomberg, Associated Press, and The Wall Street Journal have joined in on the call to push Apple for more favourable terms on its App Store.
A letter to Tim Cook by non-profit international trade association Digital Content Next (DCN) said Apple's "seemingly inviolate store terms", long questioned for favoring Apple’s own services and apps, "may well bend for those who have sufficient power to wield in their negotiations".
"The company charges 30% commission on any app store purchase. That fee reduces earnings potential for app developers while also driving up prices for consumers. Most merchants charge a flat fee," DCN said in the letter seen by Marketing. It explained that Apple takes 30% of the sale of a US$25 newspaper subscription, for example. It also takes 30% for the sale of a US$500 newspaper subscription. Thus, the more the publisher is able to charge for its service then the more Apple benefits, despite providing the same service, DCN's letter added.
DCN, which counts major news organisations such as The New York Times, The Washington Post, Associated Press and The Wall Street Journal as its members, added that this dynamic in the media industry is especially interesting to consider as advertising revenues for news organisations have cratered over the last decade. As a result, many news organisations have instead emphasised direct audience revenue, which tends to better align with trusted brands than the wild west of digital advertising.
It added that Apple’s fees and anti-competitive practices push companies away from direct audience revenue and toward the murky world of digital advertising where a publisher doesn’t have to take a 30% haircut on all customer revenue, and keeps all of the upside from its advertising earnings. "In some ways, Apple’s behavior actually works to the disadvantage of companies looking to follow their lead on consumer trust," the letter said.
The non-profit association said that Apple's "non-negotiable terms" have been an issue for sometime. It then pointed out that Apple had previously struck a negotiated deal with Amazon where Amazon Prime Video would be available on Apple TV and Apple products would be available on Amazon. As part of the terms of that deal, Apple would reduce its fee for consumers who subscribed to Prime Video from 30% to 15% amongst other advantages. According to DCN, neither Apple nor Amazon have ever publicly disclosed the deal.
"Given that they are the two most valuable companies on the planet, and the huge number of businesses that rely on these platforms, it is remarkable that such a deal has been shrouded in secrecy for so long. Some would point to this deal and say, “It’s the platforms’ world, we’re just living in it.” Frankly, the deal stinks of favoritism at best – and collusion at worst," it added.
DCN said that the "monopolistic behavior of big tech" puts a wide range of industries at a distinct disadvantage. "It is laudable that EU and American regulatory bodies are digging in and uncovering these anti-competitive behaviors. Talking trust is not enough. We need to level the playing field and transparency is a critical first step," it said.
Separately, Epic Games' lawsuit against Apple specified that the company wants to end Apple's "unfair and anti-competitive actions" that Apple undertakes to unlawfully maintain its monopoly in two distinct, multi-billion dollar markets - the iOS app distribution market and the iOS in-app payment processing market.
It explained that Apple "imposes unreasonable restraints and unlawfully maintains" a total monopoly in the iOS app distribution market. The court filing also said that Apple has become what it once railed against, "the behemoth seeking to control markets, block competition, and stifle innovation". Epic Games is also suing Google to end its "unlawful monopolisation and anti competitive restraints "in two separate markets - the market for the distribution of mobile apps to Android users, and the market for processing payments for digital content within Android mobile apps.
Meanwhile, Microsoft's EVP of gaming Phil Spencer also recently took to Twitter to announce that the company has filed a statement in support of Epic Games' request to keep access to the Apple software development kit open for the Unreal Engine, the game engine developed by Epic Games. "Ensuring that Epic Games has access to the latest Apple technology is the right thing for gamer developers and gamers," the tweet added.
In other news, Google has also come under scrutiny in Australia as the government drafts a mandatory code which will require Google and Facebook to pay news outlets for using their content. According to the Australian Competition and Consumer Commission (ACCC), the code seeks to address the fundamental bargaining power imbalance between Australian news media businesses and major digital platforms. This imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news on digital platform services than they would otherwise agree to, ACCC said.
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